Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection

Underway, in Dar es Salaam: The East African Business and Entrepreneurship Conference & Exhibition 2017. The theme: Accelerating industrialization, innovation and investment in the EAC

Chidi Odinkalu: Understanding Morocco’s application to join ECOWAS (Vanguard)

Founded in 1975, ECOWAS last admitted a new member in 1976, when Cape Verde joined. With Morocco’s application, it confronts new territory and epic dilemmas having far reaching implications for Africa’s largest regional bloc. The requirement in the founding treaty limiting membership to “such other West African States as may accede to it” was removed when the ECOWAS Treaty was revised in 1992. As such, no question of regional contiguity necessarily arises at this time. Nevertheless, the decision to consider Morocco’s application favourably pits West Africa’s rich historical affinity with Morocco against clear legal stipulations governing regional integration in ECOWAS treaties. How the Community resolves this tension will have significant implications for the future peace, security and stability of ECOWAS as a regional institution and of its member countries as they confront the shared challenge of stemming radicalization in the Sahel. Resolving this tension will not be easy.

 ECOWAS inches towards the realisation of the Abidjan-Lagos Highway (ECOWAS)

With the ratification of the enabling treaty by all five countries of the Abidjan-Lagos Corridor, ECOWAS is inching towards the realization of the dream six-lane regional super highway that connects Nigeria, Benin, Togo, Ghana and Cote d’Ivoire. And excited by this development, the ECOWAS Commission President, Marcel de Souza stated at the 9th ministerial steering committee meeting of the ALC which held in Abuja, Nigeria on the 10th of November 2017, that the boost in transport infrastructure will serve as a catalyst to intra-west African trade and an economic revamping of the region.  [AfDB, EU commit to invest $18m in Abidjan-Lagos corridor project]

Ghana condemns obstacles to easy movement of goods into Nigeria (The Guardian)

In spite of the seemingly rosy economic and business relations that exist between Nigeria and Ghana, the Deputy Minister of Trade and Industry, Ghana, Carlos Ahenkora, has decried the many obstacles mitigating the easy movement of goods and services along the Ghana-Nigeria corridor. Ahenkora, while speaking at the ongoing 2017 Lagos International Trade Fair, Ghana Day, said there was a need for both countries to deal and address these outstanding issues in order to facilitate the movement of goods and services into the country. The key issues he identified included the prohibition list, the flagrant disregard for the ECOWAS Protocol on Trade, and the difficulty associated with the National Agency for Food Drugs Administration and Control certification. He recalled several meetings and discussions held between both countries to tackle the challenges have not yield results. He said: "I think it is time for action; it is time to walk the talk. I hope the Ghana Nigeria Business Council will take these matters and expeditiously deal with them." 

Madagascar Economic Update: coping with shocks (World Bank)

Extract: The External Sector (pdf): The projected scaling-up of investment is expected to weaken the current account balance. Madagascar runs a structural current account deficit, but 2016 was an exception, with the current account recording a small surplus of 0.6% of GDP, reflecting an increase in vanilla export prices, higher textile exports, and a decline in mining-related imports. Going forward, the current account balance is expected to fall back into deficit, at around 3.4% of GDP in 2017. The current account deficit is primarily expected to be financed by external financing of public sector investment and foreign direct investment. Even though exports continue to perform well, the rise in imports is leading to a trade deficit (Figure 9). Exports continue to perform well, mainly due to extraordinarily high vanilla prices and a well-performing textiles industry (Figure 8). However, as expected, the value of imports is rising to support the scale-up of public investment activities, which is projected to increase from 5.2% of GDP in 2016 to 10.5% of GDP in 2019. Notably, the value of equipment imported by the end of September 2017 is equal to the total value in 2016. While the total value of rice imports continues to be small relative to total imports, the value of rice imports in the first few months of 2017 have exceeded the total value of rice imports in 2016, as domestic production was affected by the severe drought (Figure 7).

South Africa’s economic engagement in Sub-Saharan Africa: drivers, constraints and future prospects (Chatham House)

A key weakness of South Africa’s external policy in sub-Saharan Africa is that it lacks an effective strategy designed explicitly to bring benefits to its domestic economy – and thus to its own citizens and enterprises – relying instead on domestic rewards falling into place as a by-product of its political engagement. This contrasts with the obvious success of economic diplomacy employed by investors from other emerging countries and more developed economies such as China, Turkey and South Korea. The failure to develop a discrete economic strategy as part of its external engagement reflects in part the ANC’s vision of itself as the driver of a ‘developmental state’ – i.e. using macroeconomic policy and state intervention for the objective of domestic development – rather than as a facilitator of business and investment. [The author: Dianna Games ]

Nigeria: Achieving sufficiency in rice production requires a dedicated Customs Service (BusinessDay)

Tunji Owoeye, managing director, Elephant Group Plc, and chairman, Rice Investors Group of Nigeria attributed the decline in rice imports to the commitment of both government and private sector in Nigeria, to end the era of needless importation. This, he says has manifested through incentives for local food production from the Federal Government, and championed by the Central Bank of Nigeria through its Anchor Borrowers’ Programme. According to Owoeye, by discouraging imports, while at the same time encouraging local production, and supporting the value chain in ramping up production, the country has been able to achieve appreciable growth in self-sufficiency in food production, particularly, rice. The concluding part of the FMARD policy document captured above, which highlights smuggling, is where some bad news lies for Nigeria. While rice exports to Nigeria have dipped (from at least Thailand), increase in imports by neighbouring countries such as Benin may imply more smuggling in getting the commodity into Nigeria. Data by the Thai rice exporters showed that Benin Republic has between January and September 2017 imported 1,330, 809 metric tonnes of rice, a 51.9% increase from 876, 228 metric tonnes which was imported within the same period last year. Comparing the 2017 imports (so far) to total imports in 2015 also shows there has been a 65% increase.

 Ghana to cut $2.2bn import bill with farm support (Bloomberg)

Ghana has a target of supporting one million farmers in the next four years with plans to invest in agriculture as the West African nation seeks to increase trade and cut its reliance on food imports that cost about $2.2 billion annually. The nation of 28 million people’s food import bill is “simply scandalous,” Akufo-Addo, 73, said Monday at the Africa Business Media Innovators conference, which is sponsored by Bloomberg and is taking place in Accra. “Initially, 200,000 farmers have been targeted in the program and they are going to be given support with inputs, fertilizers, insecticides and assistance from extension officers,” Akufo-Addo said. “We believe we can scale that, hopefully, so that at the end of my first term in 2021 we will have about a million Ghanaian farmers involved in the program.”

Zimbabwe:  Govt clarifies import relaxation (Bulawayo24)

Government has clarified the easing of import controls on basic commodities saying the move does not render Statutory Instrument 64 of 2016 ineffective, but rather is a call for organisations with free funds to obtain licences for import permits to ensure adequate supplies during the Christmas period.  Industry and Commerce Minister Dr Mike Bimha told The Herald Business that the SI 64 of 2016 (now consolidated into SI 22 of 2017) explained itself in that imports would chip in whenever demand exceeds supply.  [Govt relaxes restrictions on fertilizer imports]

 Trade between China and Portuguese-speaking countries rises 29.36% between January and September (Macauhub)

With Angola trade amounted to $17.133bn (+45.37%), with Chinese companies exporting goods valued at $1.657bn (+33.65%) and imported goods worth $15.476bn (+46.75%). China’s trade with Mozambique  trade amounted to $1.339bn (+0.74%), with Chinese companies exporting goods valued at $953m (-4.04%) and importing goods worth $386m (+14.83%).

China-Africa expo provides new platform for industrial capacity cooperation (Xinhua)

An upcoming exposition will create a new platform for Chinese and African businesses to strengthen industrial capacity cooperation, officials said Monday. The China-Africa Industrial Capacity Cooperation Exposition will take place in Nairobi, 13-16 Dec 13, organized by the China Council for the Promotion of International Trade, according to Chen Zhou, vice-chairman of CCPIT, at a press conference. Preparatory work has been basically completed for the expo, which is being organized by the CCPIT in Africa for the first time, according to Chen.

 The Moroni Communique: 21st meeting of the East African Intergovernmental Committee of Experts (pdf, UNECA)

The meeting acknowledged that the blue economy in East Africa has enormous potential for job creation as well as sustainable and equitable growth, the blue economy can facilitate economic diversification. Africa has considerable resources that must be used in a sustainable manner for the benefit of member States and their populations to achieve the SDGs. To this extent, the meeting has recognized that cruise tourism is a leading sector of the blue economy and is set to develop in an important way in East Africa. The participants also noted the importance of cooperation between member States at all levels to ensure a peaceful resolution of disputes concerning the delimitation of borders and sea areas, an essential condition for a perfect optimization of the resources of the blue economy. Establishing special funds within intergovernmental organizations represent an opportunity to consolidate achievements in the blue economy. The meeting stressed the need to take into account the interests of landlocked countries in the modernization of port infrastructure in order to promote the creation of regional value chains. The development of dry ports, corridors and transport infrastructure is a priority, as part of an integrated regional approach to investment.

The meeting noted that the choice of exchange rate regime is a critical policy decision facing central banks. The advantages and disadvantages of different regimes were discussed. Experts shared the experience of their countries, illustrating the wide range of regimes currently adopted in Eastern Africa. The meeting agreed that the optimal choice depends on country circumstances and policy objectives. Exchange rate policy impacts on macroeconomic performance – such as inflation rates and export competitiveness – but it is crucial to undertake structural reforms and develop productive capacities to ensure that the benefits of each regime are realised. More research on the impacts of different exchange rate regimes would support policymaking.

 (WTO suggests moderating trade growth in fourth quarter of 2017)

The WTO’s latest World Trade Outlook Indicator (pdf) suggests that global merchandise trade growth will likely moderate in the fourth quarter of 2017. The reading of 102.2 signals continued trade expansion in volume terms, although the pace of growth should be slower than earlier in the year, when trade recorded strong increases. These results are broadly consistent with the upgraded forecast for world merchandise trade growth that the WTO issued on 21 September 2017, which predicted 2017 trade expansion at 3.6% following stronger than expected trade growth in the first half of the year.

African aviation industry calls on governments to ease revenue repatriation (New Times)

The International Air Transport Association has called on African governments to address the issue of blocked funds that is affecting the industry’s capacity to become profitable. The appeal was made yesterday at the opening of the 49th annual African Airlines Association general assembly in Kigali. According to IATA, in Africa, airlines are experiencing varying degrees of difficulty repatriating revenues earned in most countries on the continent especially in Angola, Algeria, Eritrea, Ethiopia, Libya, Mozambique, Nigeria, Sudan and Zimbabwe. The repatriation is mainly hampered by monetary policies of some countries mainly because the industry largely trades in US dollars. Dr Elijah Chingosho, the outgoing African Airlines Association Secretary General, said up $1 billion airlines’ cash is currently blocked, affecting the industry’s capacity to reinvest. According to Chance Ndagano, the acting chief executive officer of RwandAir, the habit of blocking funds has equally often affected the national carrier’s ambitious plans to expand its wings across the Africa.


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